Venture capitalists favor HR sector in enterprise service field

Wen Feixiang, founder and CEO of ITjuzi, speaks at a summit on VC investment in Beijing, on Dec 21, 2016. [Photo provided to chinadaily.com.cn]

Human resources sector was the favorite target of venture capital (VC) investors in the field of enterprise service in 2016, according to a report.

In 2016, a total of 436 investments by venture capitalists went to the field of enterprise service, with human resources sector attracting 72, topping the list of all sectors, said 2016 Enterprise Service Venture Capital report released on December 21 by ITjuzi, a website dedicated to data on tech investments, at a summit on VC investment in enterprise service.

As more start-up companies emerge and focus on a flat organization structure, the demand for Software as a Service (a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted) is increasing, helping founders improve their company’s efficiency, said Wen Feixiang, founder and CEO of ITjuzi.

Though the overall VC investment volume in enterprise service fell by 5.8 percent year-on-year to 27.6 billion yuan ($3.97b) in 2016, the human resources sector rose 50 percent to 3.6 billion yuan, according to the report.

The human resources sector faces a large rigid demand, at both before- and after-offer stages, that the service supply is not able to meet, said Xin Xiaodie, founder of Hunteron, a job hunting company, at the summit.“This business is definitely profitable and we don't need to make money a priority,” added Xin.

It is commonly believed that the human resources service industry is full of opportunities.

Take the social insurance payment management for instance, the long-standing low efficiency gives opportunities for start-up professional companies thanks to the fast development of internet, said Yu Qingquan, founder of 51shebao.com, an online social insurance payment agency.

In fact, 24 percent of new HR-related companies set up this year in the field of enterprise service received VC investments, higher than the field’s overall number of 16 percent.

Meanwhile, ITjuzi unveiled its 2016 China’s 100 Most Valuable Startups in Enterprise Service Field on December 21, focusing on those startups that are unlisted but have financing records.

On the list, the total value share of human resources enterprises is as high as 17 percent, along with cloud computing companies topping the rank. Two of the top five are human resources companies, both surpassing 5 billion yuan in value.

However, as the human resources sector grows continuously, the service providers will face bigger and more complicated demand, which consequently requires a higher capacity of them.

The key lies on service continuity and efficiency, said Hu Jianglong, founder of Microseer, a human resource outsourcing service company.